Auditor finds abuses, little oversight in city use of temporary job contracts

What was supposed to be a short-term, temporary way of filling city jobs has turned into long-term employment for some, and in a few cases political patronage, according to a city audit released yesterday.

And in the process, city laws were violated and oversight of these contracts was lacking at times, according to the audit.

"I think you could probably see some degree of abuse occurring -- that's probably a major concern that probably any taxpayer or maybe even the Council would have," city Auditor Les Tanaka said.

The audit examined personal services contracts, which are used by city agencies to hire employees outside of the civil service system to meet temporary needs.

According to the audit, city agencies are required to tell why the service is needed and unique, justify why they would need to fill the position via personal services contract instead of going through civil service, and ensure that the contract runs for less than a year.

The audit looked at personal services from July 1, 2002, to June 30, 2005. All but the last six months of that period occurred during former Mayor Jeremy Harris's administration.

During this three-year period, the city had contracts with 1,800 to 1,900 individuals at an annual cost of $9 million to $11 million.

"The primary intent of the Charter is to provide the city with a temporary means to fill positions which are, or will become, civil service positions," the audit said. "We found, however that the city's personal services practices violated the Charter intent by using personal services contracts for long-term needs and purposes other than filling permanent civil service positions."

According to the audit, 251 individuals other than on-call or seasonal employees filled contracted positions for more than a year during the three-year period.

More than half of those individuals held positions for longer than two years, and 56 of them were employed for the entire three-year period.

One of the primary reasons agencies gave auditors for using personal services contracts during this period was the Harris administration's refusal to fill hundreds of vacant positions unless the filling of those jobs was approved by administration officials.

"This group of contracted employees sort of flies under the radar in terms (of) Council oversight. Even the budget review gets real sketchy, because it's hard to identify in the budget," Tanaka said. "You can use savings from vacant positions and actually have the position filled, but on paper it looks like it's vacant."

Other reasons given for the use of personal services contracts include using retirees to assist regular staff and the desire to use capital improvement money to pay for contract salaries.

The audit also found that some of the contract practices were "questionable," including personal services contracts awarded to former elected officials.

Former Councilman Steve Holmes received personal services contracts under the Harris administration, and former Council Chairman John DeSoto and former state Sen. Milton Holt, who served about six months in prison after pleading guilty to a federal mail fraud charge, received contracts under Mayor Mufi Hannemann's administration.

"That usually will occur in some kind of system that has a lot of flexibility and little oversight," Tanaka said.

Current city Human Resources Director Ken Nakamatsu could not be reached for comment.

But in a letter written in response to the audit, Nakamatsu said that most of the report dealt with the practices of the previous administration.

"I will not respond to those concerns here partly because the focus has changed, and more importantly, because I am satisfied (and your report bears out) that my staff acted within the law under the circumstances that existed at the time," Nakamatsu said. "I reiterate that I believe this to be a good and useful report."

Tanaka said he believes that the Hannemann administration is working to improve things. "I think they're trying to clean it up," Tanaka said.

» Audit said that his final contract salary "is the fourth highest paid contract position between July 1, 2002, and June 30, 2005, and nearly double the $3,613 salary the person earned as a Council member."

John DeSoto: Elected to the City Council in 1986 and served for 16 years. He was City Council chairman when he ended his term. Hired as a Community Relations Specialist I.

» Feb. 15, 2005, to June 30, 2005. Salary of $3,030.

» Audit said that "this person received questionable work benefits. At the time of our fieldwork, the contractor had neither a desk or phone number at the department's offices in Kapolei Hale and reportedly had a desk in Honolulu Hale but no assigned city phone number. When the department needs to contact the contractor, department staff call the contractor at home."

Milton Holt: Elected to the state House in 1978, then the state Senate in 1980 before being defeated in 1996. Personal contract services with the Department of Community Services. His salary is paid for by a federal grant.

» June 16, as Planner III. Salary unavailable, but slightly below the range of $37,632 to $53,628 a year.

» Audit had little information about this contract, other than saying, "we also found a former state senator filling a personal services contract position with the Department of Community Services." The information on his contracts came from the department.